Stockholm (NordSIP) – It has been over a year now since Nawel Boukerdroun joined Nordic boutique fund manager Pareto Asset Management. Time enough for the young ESG analyst to truly appreciate the firm’s collaborative working environment and the professionalism of her colleagues. She assures NordSIP that at Pareto, striving to deliver solid returns to investors through active investment decisions goes hand in hand with adhering to high sustainability standards.
“Pareto has this ability to create and maintain a close relationship with the companies we invest in,” she says. “And as an analyst, I benefit from the experience and network of the fund managers. The whole management team is very supportive and helpful when it comes to initiating proactive dialogue with companies.”
Catching up with Boukedroun at the very start of the new year, a recap of 2021 is inevitably in order. “It was a pivotal year in many ways, and we saw some dramatic changes, especially during the last couple of months,” she comments. “The conclusions of the IPCC report amplified the sense of climate emergency, and the public opinion pressured decision-making. Despite certain scepticism regarding the outcome of the COP26, it was still a breakthrough for many. It seems like we have turned a corner. We have since seen several financial authorities tighten policies. Meanwhile, financial institutions have intensified their actions to reach the climate goals,” adds the analyst.
Looking ahead, Boukedroun acknowledges that many companies are struggling to adapt and rethink their businesses. “The good thing is, corporations are now completely open to talking about sustainability and eager to understand investors’ expectations with regards to the new regulations,” she says. “We aim to support the companies in our portfolios to improve their practices and policies around areas such as energy transition or promoting human rights. We are happy to share our views, of course, but active listening is even more important in this dialogue and enables us to understand the challenges that issuers face. It also helps us analyse the companies’ robustness and their ability to comply with our objectives,” explains Boukedroun.
As to her own priorities for the year ahead, the ESG analyst seems focused on one task, in particular, impact measurement. “I truly believe that it is our duty to our clients to deliver verifiable progress,” says Boukedroun. “I am deeply committed to supporting the development of sophisticated impact measurement that goes beyond filling out arbitrary ESG spreadsheets,” she adds. “Engagement, especially, should not be a new greenwashing tool to keep holding companies that fall under the sustainability expectations.”
According to her, quantifying impact is an enormous challenge as there is no consensus on the definitions and plenty of data reliability issues. “Our approach is based on comparability across time, and we use science-based methodologies and monitor the outcome of engagement dialogues systematically,” explains Boukedroun. She is, however, humbled by the task and quick to admit that these methods, too, have their limits.
One thing that worries the ESG analyst is how new regulations fail to treat the different aspects of sustainability on equal terms. “The EU Taxonomy, for instance, amplifies the importance of ‘E’,” she points out. “Yet what is the point in having a greener portfolio if the companies in it benefit from forced labour or use secretive governance practices? We, responsible investors, should make sure that all aspects of the entire value chain are sustainable when assessing companies to invest in,” concludes Boukedroun.
Image courtesy of Pareto